By Alistair Smout and Sudip Kar-Gupta
LONDON (Reuters) - Britain's top share index bounced from its lowest level in more than three years on Thursday, boosted by comments from the European Central Bank which implied further monetary stimulus was on the horizon.
However, gains were capped by renewed weakness on Wall Street, where early session gains were shortlived.
President Mario Draghi said the ECB would review its monetary policy in March, sending stocks higher and the euro lower as investors anticipated a further loosening of monetary policy.
That sent the FTSE 100 up 56.57 points, or 1 percent, at 5,730.15 by 1504 GMT, away from its lowest levels in over three years reached in the previous session.
The index entered "bear market territory" on Wednesday, down over 20 percent from a record high hit last April, as concerns over Chinese growth and a slide in the price of oil have taken their toll.
"It was always likely that Draghi's message was going to be dovish today given the turmoil in the markets so far this year," Craigh Erlam, senior market analyst at OANDA, said.
"That said, I don't think people anticipated such a blatant and clear warning of a monetary policy response at the next meeting."
The FTSE underperformed European indexes, which are more sensitive to weakness in the euro, though growth sensitive stocks such as the miners were among the top gainers.
Media and education publisher Pearson (L:PSON) surged 16 percent after investors welcomed its plans to cut costs.
Among gainers, Royal Mail (L:RMG) Group rose 3.2 percent after seeing a better-than-expected increase in parcel volumes, buoyed by strong Christmas trading.
Despite the rise, gains were trimmed after U.S. stocks started to fall, with concerns about global growth still in abundance.
U.S investment bank Citigroup (N:C) cut its growth forecasts for the world economy on Thursday, and said risks of a global recession were increasing.
"I would not want to buy in here. Trying to call a bottom to this market is a bit of a fool's errand," said Darren Sinden at Admiral Markets.